ConocoPhillips has announced that, in conjunction with its co-venturers, it has reached agreement with the Libyan National Oil Corporation on the terms under which it will return to its former oil and gas production operations in Libya.
Under the agreement, ConocoPhillips and co-venturers Marathon and Amerada Hess will return to their former exploration and production interests in the Waha concessions in Libya. ConocoPhillips and Marathon each will hold a 16.33 percent interest, Amerada Hess will hold an 8.16 percent interest, and the Libyan National Oil Corporation will hold the remaining 59.16 percent interest. The concessions currently produce approximately 350,000 barrels of oil per day; encompass nearly 13 million acres located in the Sirte Basin, one of the most prolific oil and gas producing areas of Libya; and contain sizable undeveloped oil and gas resources.
As a result of the transaction and based on the current gross production figure of 350,000 barrels of oil per day provided by the government, ConocoPhillips would expect to add in the range of 45,000 net barrels of oil per day to its production profile.
“We are pleased to be resuming our long and productive partnership with the people and the state of Libya in this strategic asset,” said Jim Mulva, ConocoPhillips’ chairman and chief executive officer. “This agreement provides a strong basis for us to invest in our aligned goals for increased reserves and production, and in the training and development of our Libyan work force.”
The fiscal terms of the agreement will be similar to the terms in effect at the time of the suspension of the co-venturers’ activities in 1986. The reentry terms include a 25-year extension of the concessions to 2031-34; a payment to the Libyan National Oil Corporation of $1.3 billion ($520 million net to ConocoPhillips) for reentry and the extension of the concessions; and a contribution to unamortized investments made since 1986 of $530 million ($212 million net to ConocoPhillips) that were agreed to be paid as part of the 1986 standstill agreement to hold the assets in escrow for the U.S.-based co-venturers.